Editorial in the Las Cruces Sun-News entitled, "DEMAGOGUING AND THE MINIMUM WAGE"

March 14, 2013

Webster defines a ‘Demagogue’ as “a person, especially a political leader, who gains power by arousing the emotions, passions, and prejudices of the people.” Therefore, political demagoguing is “treating or manipulating a political issue in the manner so as to obscure or distort with emotionalism, prejudice, etc.” Unfortunately, this is the preferred weapon of choice in today’s political realm. But, even more disturbing, demagoguing actually works.

A perfect example of this is the current minimum wage debate in Santa Fe. Last week, the New Mexico Senate voted to increase the state’s minimum wage from $7.50 to $8.50 an hour. And, of course, there was lively debate on the floor. Sen. William Sharer, R-Farmington, offered an amendment to further raise the wage to almost $22 an hour. He argued why stop at $8.50 if, as the Democrats claim, a higher minimum wage is economically and socially beneficial? Why not raise it high enough to dramatically improve the economy and eradicate poverty at the same time? This seems like a legitimate question. However, in response, Sen. Richard Martinez, D-Espanola pointed out that legislators receive $154 a day for expenses when on official business, desensitizing some in power to the struggles of many. He also added, “We get to make laws and make fun of poor people.”

Uhh…say what? Does this sound like a reasoned and truth seeking response to the pros and cons of raising the minimum wage? Is Sen. Martinez honestly trying to address Sen. Sharer’s concern? Or did it sound more like an attempt to obscure the economic truth by manipulating the issue with class warfare and accuse Sen. Sharer and others of a lack of concern for the poor? I would argue the latter.

Another response on par with Sen. Martinez’s comments was from Sen. Jacob Candelaria, D-Albuquerque. He said, “It’s real hard to pull yourself up by the bootstraps…when you were born with no boots.” While this may be true in principle, it doesn’t seem his statement was designed to increase awareness about the consequences of a low minimum wage. Instead, it seems like the senator was simply arousing emotions about how difficult it is for the poor. And if you are not in favor of increasing the minimum wage you must not care about their struggle. By the way, this country became great because of the countless examples of folks who realized the American Dream through nothing more than hard work and individual responsibility.

I was impressed, however, by the argument from Sen. Bill Soules, D-Las Cruces. He said that the raise in minimum wage would be “good for the economy” because “the extra money [employees] earn would be poured back into the economy for purchases of food, gasoline, clothing and shelter.” Now this is an argument not based on prejudice and emotion, but on economics. This type of response gets us closer to the truth about the impact of changing the minimum wage. I love it! However, the argument is not true. Why? When employers spend extra money on labor without a corresponding increase in productivity it results in a zero gain in wealth. And since the employers would spend this money the same way the employees would, there is no extra money “poured back into the economy”. The net result: zero economic growth.

The truth about the minimum wage is that when government forces this artificial increase onto companies, the only option for the employer is to either raise prices or transfer money from capital. Raising prices hurts the consumer and results in reduced purchases. Lower capital funds reduce the ability of the employer to expand and hire more employees which results in either a freeze in hiring, firing employees, or worse case, putting companies out of business. Not only does this result in zero or negative economic growth, it also takes away opportunities from the very people government thinks they are helping.

Ironically, in today’s competitive market place, a government regulation in the form of a minimum wage is not even necessary. Employers aren’t stupid. They know it takes a well-trained and happy work force to be competitive, productive and successful. This, in turn, is what makes the business successful. We always hear about how difficult it is to work for a bad boss, but you never hear from the bosses’ point of view about how difficult it is to lead disgruntled and unhappy employees. Employers know their most important asset is people. And if they don’t put this most precious resource first, they will most likely be unsuccessful in the long run. This is what produces the most competitive and fair wages available; not some government mandate. So, let’s stop demagoguing, leave the minimum wage alone, increase opportunities for all New Mexicans, and improve our economy.

Neal Hooks